Correlation Between Encres Dubuit and ISPD Network

Can any of the company-specific risk be diversified away by investing in both Encres Dubuit and ISPD Network at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Encres Dubuit and ISPD Network into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Encres Dubuit SA and ISPD Network SA, you can compare the effects of market volatilities on Encres Dubuit and ISPD Network and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Encres Dubuit with a short position of ISPD Network. Check out your portfolio center. Please also check ongoing floating volatility patterns of Encres Dubuit and ISPD Network.

Diversification Opportunities for Encres Dubuit and ISPD Network

0.39

Correlation Coefficient

Encres Dubuit  ISPD Network

Weak diversification

The 3 months correlation between Encres and ISPD is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Encres Dubuit SA and ISPD Network SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ISPD Network SA and Encres Dubuit is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Encres Dubuit SA are associated (or correlated) with ISPD Network. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ISPD Network SA has no effect on the direction of Encres Dubuit i.e., Encres Dubuit and ISPD Network go up and down completely randomly.

Pair Corralation between Encres Dubuit and ISPD Network

Assuming the 90 days trading horizon Encres Dubuit SA is expected to generate 0.85 times more return on investment than ISPD Network. However, Encres Dubuit SA is 1.18 times less risky than ISPD Network. It trades about 0.0 of its potential returns per unit of risk. ISPD Network SA is currently generating about -0.02 per unit of risk. If you would invest  282.00  in Encres Dubuit SA on December 30, 2024 and sell it today you would lose (4.00) from holding Encres Dubuit SA or give up 1.42% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Encres Dubuit SA  vs.  ISPD Network SA

Encres Dubuit SA

Risk-Adjusted Performance

Very Weak

Over the last 90 days Encres Dubuit SA has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Encres Dubuit is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

ISPD Network SA

Risk-Adjusted Performance

Very Weak

Over the last 90 days ISPD Network SA has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, ISPD Network is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Encres Dubuit and ISPD Network

The main advantage of trading using opposite Encres Dubuit and ISPD Network positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Encres Dubuit position performs unexpectedly, ISPD Network can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in ISPD Network will offset losses from the drop in ISPD Network's long position.

The idea behind Encres Dubuit SA and ISPD Network SA pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Share Portfolio module to track or share privately all of your investments from the convenience of any device.